Is the “Paperless Office” a realistic goal for law firms?

Although the exact origin of the term “The paperless office” is still the subject of some debate, the basic idea was that office automation would make paper redundant for routine tasks such as record-keeping and bookkeeping. Although the widespread adoption of personal computers helped to make this goal more realistic, these predictions have yet to be realised.

In fact, because improvements in printers and photocopiers have made it much easier to reproduce documents in bulk, and since word-processing has allowed a larger number of people – that is, not only secretaries – to produce these documents, technology has actually increased the amount of documents being printed since the 1980s.

However, since about 2000, global use of office paper has levelled off, and is now actually decreasing for the first time, possibly due to a generation shift that reflects the willingness of younger people to read documents off a computer screen, instead of printing them.

This changing demographic isn’t the only reason for a decline in paper, however. The traditional office used to consist of paper-based filing systems that included filing cabinets, folders, shelves, and a variety of other storage solutions, all of which take up considerable space. A paperless office, on the other hand, could consist of nothing more than a desk, chair, and computer. In theory, this model could lead to cost savings, less clutter, easier information sharing, increased productivity, and reduced environmental impact.

But for law firms in particular, is this vision of the paperless office really achievable?

“A total and absolute paperless office is probably an unrealistic goal now and for the foreseeable future for most practices,” says Andrew Sherwin, Director at Quill Pinpoint. “However, practices can certainly reduce the amount of paper that they are holding and storing by adopting some quite simple and cost-effective technologies. In our market sector (small and medium sized law firms), we are seeing some quite clever use of our systems, as well as third-party applications, in this regard.”

Indeed, the current trends in this area seem more likely to offer firms a “Less Paper” office, rather than a “Paperless Office”. As such, the term is increasingly being used to describe the various processes and systems that help to reduce the need for paper, and which convert at least some documentation into a digital form. Many examples of this technology are already being used by businesses, including financial systems that have replaced general ledgers, databases that have replaced index cards and rolodexes, as well as email replacing type-written letters and faxes and the Internet replacing many reference books.

Although some law firms remain sceptical of this new technology and question whether electronic data will ever replace traditional printed documents, Quill Pinpoint and other members of the Legal Software Suppliers Association (LSSA) are confident that their software solutions can keep electronic data both secure and accessible as the trend towards electronic data grows.

The LSSA is already working with a number of law firms that can see the benefits of this shift towards electronic data. Manchester-based Licensing Legal Solicitors provides a good example. The firm, which deals exclusively with liquor, entertainment and gambling licensing and regulatory issues for the hospitality/leisure industry, has already taken some steps towards a “Less Paper” office by creating a secure web-based storage system for PDF licences, so that its clients can log into the system to view and print these documents at any time.

“From 2010, our area of work (licensing) will become paperless in terms of submission, as the result of a new European Directive in this area. Whereas now we send out about 10 copies of every application to the council, police, fire authority, trading standards, and so on, from 2010 it will all be dealt with online, using PDF documents and the like. This is a very good development for us, as it will cut down on a significant amount of postage and waste paper, and will therefore allow us to reduce costs, as well.”

Matthew Lancaster, Sales and Marketing Director at Osprey.tm, another LSSA member, echoes these sentiments. “Without a doubt, reduced paper usage can have enormous benefits for law firms, and is actually a very easy goal to achieve once firms decide to do it; it’s actually making that decision which is the hurdle,” he says. “Electronic files allow law firms to be much more efficient, since documents are instantly at their fingertips, rather than in a filing cupboard or ‘out’ somewhere. As well as this considerable benefit in efficiency (and cost saving when it comes to fixed-fee work), the law firm can also provide a better service to its clients this way, by being able to respond to queries immediately.”

In addition, he says, electronic documents can be shared with clients and/or associates easily, with the click of a button, or via client transparency systems such as online file publishing. Fee earners can therefore share files without the physical restriction of identifying who has the paper file. Not only that, but there are clearly savings in storage costs, and the benefit of a less cluttered office.

“For us, the first and most important step towards reducing our clients’ reliance on paper is to educate practices, whatever their size, on the practical benefits that this technology can provide,” adds Quill Pinpoint’s Andrew Sherwin. “Often, and certainly in the past, smaller firms have discounted the use of certain systems on the basis it would be “too expensive or too onerous to deploy”, and yet this is often not the case.”

Matthew Lancaster agrees. “We often find ourselves advising our clients on how to increase efficiency, and the shift towards electronic documents helps to facilitate this,” he says. “For example, it is much less expensive to email documents than to print and post them, and also much quicker. You can exchange many emails in a day, and yet the equivalent by post could take weeks.”

Even so, although a large scale reduction of paper may be possible in some sectors, the legal sector presents its own unique challenges. For example, there are currently areas where paper is still required for compliance with SAR, SRA, LSC & HMRC legislation. Don’t these operational and/or legal restraints make the Paperless Office an impossibility for law firms, in particular?

“I think that an ‘impossibility’ is perhaps too strong and too broad a word, but there are certainly legal and operational issues and implications that a practice should consider before embarking upon the holy grail of the paperless or less-paper office,” says Andrew Sherwin. “For example, we have introduced our clients to an almost paperless month and year-end accounting reporting procedure, although the SRA Regulatory Report is still produced in paper format for the partner(s) to inspect, question, understand and sign.”

Darren Baldwin, Software Development Manager at FWBS Ltd, another LSSA member, can see this need to retain some paperwork in this regard. “There will always be various reasons for keeping a hard copy of certain documents,” he says. “Maybe for legal reasons or maybe because having a hard copy is preferred within certain scenarios, such as the company’s board meeting. What is evident, though, is that by storing all of the company’s documents within a Case or Document management system, firms will have the ability to catalogue and index the information contained within the system easily. This can then provide the system’s users with rapid access to specific documents, and additionally, any related documents. These documents can then be retrieved via key word searches or filed under Client and Matter references.”

It seems that paperless reporting, in particular, has many benefits to a practice, including reduced storage requirements, immediate comparison of past accounting periods, months and years, the possibility of secure and encrypted off-site storage of reports to assist with BC&DR planning, and remote access to accounting reports for the auditing accountant, which can help to reduce audit costs significantly.

This last point could be very useful to practices, as it allows accountants to monitor the accounting position of their clients’ accounts from SAR compliancy, to the profit and loss situation, to cash flow forecasting. Plus, in the future, other stakeholders in a firm – such as banks, the LSC, and third-party investors – may benefit from similar remote access for their own purposes.

“In terms of our month end reporting, we now store a lot less paper, it’s true, and yet we still get the Law Society client account audit form for signature each month from Pinpoint,” says Licensing Legal’s Richard Williams. “However, we also print out management reports for partner discussion, and we have a hard copy of outstanding debts each week, so there are benefits to using paper and also benefits to eliminating it where possible. In my view, there is still a value to being able to pick up a file and see what has been going on, so I doubt that we’ll be totally dispensing with paper files in the near future.”

Another common argument made by the firms who would prefer to stick with paper concerns data security, since the idea of sending documents electronically can often raise concerns. But is it really any more or less secure to send documents and submit forms electronically than through the post?

“When it comes to sending documents electronically, the main thing is that the practice understands the risks, regardless of the particular system they are using,” says Andrew Sherwin. “For example, if you are sending an email with confidential attachments, applying a Microsoft Office password to the attachment cannot be classed as robust web security, and does little more than provide a false sense of security,” says Andrew Sherwin. “A much better alternative would be for the practice to send an alert to clients, advising them that a document is ready for collection, and then allowing them to log into a secure web site to download the document at their convenience.”

Matthew Lancaster agrees. “I actually think that electronic files, if used correctly, actually tend to be more secure than their printed counterparts, as firms have easy access to a range of highly effective security options that simply aren’t able to protect a stack of papers. Plus, electronic filing means that you can easily work on the file from home at the weekend, without taking the paper file home. That means there is much less risk of leaving a folder on the train or having it stolen from your car.”

“Not only that, but having an electronic file stored securely off-site also provides a complete and immediate Disaster Recovery Plan, in the event of a fire, flood or other disaster at the law firm’s offices,” he adds. “Just imagine the downtime if a firm had a fire and all the paper files were destroyed, or even if a file just happened to get lost. Electronic systems can be used to protect a firm’s data against all of these scenarios.”

Even so, certain documents clearly need to be retained in original format. Signatures on paper documents, for example, still tend to be more acceptable as proof of ownership/agreement, and yet correspondence by email does not typically need to be saved in hard copy. Firms could therefore destroy some documents to benefit from reduce storage costs. At the same time, a paper file can be kept off-site as a “back up” in case original documents are called for, and the electronic file can act as the “live” day-to-day file.

“This approach will deliver all of the benefits of reduced paper in the office, whilst still ensuring that original documents are retained, where necessary,” Matthew Lancaster adds. “Plus, with this method, original documents can actually be stored more cost effectively in out of town locations, as they are rarely (if ever) looked at. The ideal for many law firms is a web-based application, so that firm can work with virtual files whilst still retaining key documents in hard copy, safe in the knowledge that all of their data is safe and stored securely off-site.”

“No matter how compelling the argument, many practices are still more comfortable with paper-based processes and don’t feel the need to change, and to be fair, paper does have its advantages: it’s tactile, it can be passed around, it can be considered, and can be read in locations where more hi-tech options simply aren’t convenient, or where their use unacceptable,” says Andrew Sherwin. “However, as technology advances and the applications that handle these new methods of working become cheaper and more efficient, it is almost certain that firms will start to adopt them as standard working practices.”